HONG KONG SAR, CHINA Trends and Developments Contributed by: Pang Lee, Joyce Wang, Mark Liang and Francis Li, Cooley
allowing licensed VATPs to offer staking services, subject to prior written approval and compliance with expected standards covering operational controls, custody safeguards and risk disclosures. In parallel, the SFC updated its requirements for SFC-authorised funds with virtual asset exposure, enabling participation in staking within defined con- straints. These include requirements to stake through licensed VATPs or authorised institutions, alongside caps designed to manage liquidity risk. The key takeaway from these developments is that staking is now treated as a regulated product fea- ture, rather than a purely technical network function. This framing introduces obligations around suitabil- ity, disclosure and operational resilience (ie, the areas familiar to traditional financial institutions, but often underdeveloped in crypto-native operating models). Broadening VATP products and services: towards tokenised securities distribution On 3 November 2025, the SFC issued a companion circular expanding the permissible scope of products and services offered by licensed VATPs. This included updates to token admission requirements, as well as clarifications on the distribution of tokenised securities and digital asset-related investment products. It also addressed custody arrangements for certain assets not available for trading on VATPs, which marks an important bridge between crypto market infrastructure and digital securities distribution. It reinforces the tra- jectory for Hong Kong VATPs to evolve beyond spot crypto venues into regulated distribution channels for tokenised representations of traditional financial products. Market making, broker financing and a pathway for perps In February 2026, the SFC introduced a further set of measures aimed at enhancing liquidity and deepening market structure. VATPs may, subject to safeguards, engage affiliated market makers, reflecting regulatory recognition that onshore liquidity has remained rela- tively shallow and requires active support. Licensed corporations providing virtual asset dealing services under omnibus account structures may now offer financing for virtual asset transactions, participate
in shared order books and operate under enhanced requirements where client withdrawals are permitted. The SFC also introduced a high-level framework for VATPs to propose virtual asset perpetual contracts. This reflects a “controlled innovation” approach: VATPs are invited to submit proposed models, with the framework explicitly designed to evolve alongside market development. These efforts significantly strengthen Hong Kong’s credibility for institutional and sophisticated users, but also raise the compliance bar, particularly in areas such as conflicts management, market surveillance, collateral and margin controls, derivatives suitability assessments and cross-entity governance. Tokenisation Moves Into “Real-Value” Rails Government digital green bonds Hong Kong continues to deploy tokenised bond issu- ance as a strategic policy tool to normalise tokenisa- tion within capital markets. On 11 November 2025, the government announced the successful pricing of approximately HKD10 billion in multicurrency digital green bonds, which is its third such issuance, follow- ing earlier transactions in 2023 and 2024. Two features distinguish the 2025 iteration. First, the issuance introduced an option to settle HKD and RMB tranches using tokenised central bank money alongside conventional settlement rails. The govern- ment described it as the first digital bond offering to integrate tokenised central bank money (specifically e-CNY and e-HKD) into the settlement process. Sec- ond, the issuance emphasised interoperability and standardisation. It incorporated digital token identi- fiers (DTIs) under ISO 24165, linked DTIs to interna- tional securities identification numbers (ISINs) and legal entity identifiers (LEIs), and expanded adoption of the International Capital Market Association Bond Data Taxonomy. Accordingly, tokenisation is being engineered to inte- grate with existing institutional infrastructure, rather than operating as a standalone blockchain proof of concept.
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